Cartier corporation currently sells its products for $50 per unit. the company's variable costs are $20 per unit. fixed expenses amount to a total of $5,000 per month. what is the company's contribution margin ratio?

Question

Business

Kassidy Aguirre

10 January, 19:22

Cartier corporation currently sells its products for $50 per unit. the company's variable costs are $20 per unit. fixed expenses amount to a total of $5,000 per month. what is the company's contribution margin ratio?

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Alan · Answer 1

The answer is 40%, in which the following are given: the Variable expense is equal to 20 dollars per unit and Sales is equal to 50 dollars per unit. Use the formula Variable Expense Ratio = Variable Expenses / Sales to get the answer.

Variable Expense Ratio = Variable Expenses / Sales

Variable Expense Ratio = 20 dollars per unit / 50 dollars per unit

Variable Expense Ratio = 40 %

The variable expense ratio is an expression of variable production costs of the company as a percentage of sales, calculated as variable expense divided by total sales. It compares a cost that alters with levels of production to the number of revenues generated by production.